Oil Continues to Trend Lower

May 23rd, 2011
in econ_news

oil well Econintersect:   Oil dropped more than 2 percent Monday (May 23) as the dollar strengthened and expectations for an economic slowdown in China built.  Benchmark crude for July delivery lost US$2.40, or 2.4 percent, to settle at US$97.70 per barrel on the New York Mercantile Exchange.  In London, Brent crude gave up US$2.29 or 2 percent, to settle at US$110.10 per barrel on the ICE Futures exchange.

Follow up:

Crude dropped as the dollar rose against other currencies. Oil is priced in dollars, and it tends to fall as the dollar rises and makes crude more expensive for investors holding foreign money. The U.S. Dollar Index, which measures the dollar against other major currencies, rose 0.7 percent amid concerns about Europe's debt crisis.  The decline in oil prices provided some relief at the pump for U.S. drivers.  From Reuters:

The national price for regular, unleaded gasoline fell 11.1
cents over the last week to $3.85 a gallon.

Despite the drop, gasoline is $1.06 higher than a year ago,
based on the department's weekly survey of service stations.
Several cities saw even more savings, with weekly prices
down 24 cents in Cleveland, 15 cents in Chicago and 14 cents in
Houston. Fuel prices fell 10 cents in Los Angeles and San
Francisco.

In New York, the price of WTI (West Texas Intermediate Crude) has dropped $17 a barrel from its high on May 2.  According to Prof. James Hamilton, Professor of Economics at the University of California, San Diego, writing at GEI Analysis, this much decline in the price of oil should produce a $0.40 a gallon decline in the price of gasoline.  However, the decline has only been about $0.15 from the high earlier this month.  If oil prices were to remain around $97 a barrel another $0.25 drop in unleaded regular should be expected in the coming weeks.  Some are projecting that the price could drop to $3.50.  

Sources:  Reuters, GEI AnalysisArab News and Shanghai Daily









Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.















 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved